The Missouri Department of Revenue (DOR) recently issued a revenue ruling discussing the taxability of certain food items sold to customers in the state. Mo. Ltr. Rul. No. LR 7108 (Dept. of Revenue Jun. 11, 2012).
The party that applied for the ruling sells shake mixes and cookies that are meant to be consumed as meal replacements. Neither are designed to be a meal supplement. The shakes and cookies carry a nutrition facts label, may be purchased using food stamps, and are meant to be consumed at home. Customers may purchase the items individually or in bundles and kits with other non-food items that the Applicant also sells. The Applicant wanted to know whether (1) the sale of the shake mix and cookies to be consumed at home were subject to the reduced food sales tax rate when sold individually and (2) if the sale of these items in bundles and kits were subject to tax at the regular state sales tax rate.
In response to the first question, the DOR stated that the shake mix and cookies were subject to tax at the reduced rate for food. In Missouri, food is defined as "only those products and types of food for which food stamps may be redeemed pursuant to the provisions of the Federal Food Stamp Program contained in 7 U.S.C. Section 2012," and "shall include food dispensed by or through vending machines." Mo. Rev. Stat. Ann. sec. 144.014. Additionally, food items must be consumed at home and carry a nutrition facts label in order to be considered eligible for the Federal Food Stamps Program (now known as the Supplemental Nutrition Assistance Program (SNAP)). Since the Applicant's shake mixes and cookies carry these nutrition facts labels and are meant to be consumed at home as a meal replacement, they qualify as food and are subject to the reduced tax rate.
In response to the second question, the DOR stated that the Applicant's sale of the shake mix and cookies in kits and bundles with other non-food items would be subject to tax at the regular rate. Mo. Rev. Stat. Ann. sec. 144.020. In order to qualify for the reduced rate of tax for food, qualifying items must be separately stated on the invoice from other non-food items. If the items are not stated separately, they total amount will be subject to tax without any reduction for the food items. Mo. Rev. Stat. Ann. sec. 144.021. Because the Applicant had stated that it does not separately state charges for food items on its invoices, the entire charge is subject to tax at the full rate.